Outsourcing: not the golden ticket for Ireland’s rebound

15 Nov 2013 11:38

Ireland’s first dedicated survey of business operations has shown that outsourcing is no longer the golden ticket for enterprises seeking to reduce cost or improve quality.

First survey of business operations published by Pathfinder

Dublin, Ireland, 15th November 2013: Ireland’s first dedicated survey of business operations has shown that outsourcing is no longer the golden ticket for enterprises seeking to reduce cost or improve quality. The survey, which included in-depth interview with nineteen CEOs, COOs and Operations Managers as well as a questionnaire completed by over 150 businesses, showed good news for European outsourcing providers, but mixed news for those choosing to outsource.

The survey also included three interviews with leading Operations Managers – Gary Conroy, COO at Realex Payments, a global online payments gateway; John Donnelly, Operations Director at Largo Foods, Ireland’s largest snack food company and Denis Healy, Deputy CEO at the Port of Cork.

“From telephone helpdesks to Tayto crisp manufacture, this survey allowed us to speak directly to businesses across the financial, food, insurance, logistics, government, agribusiness and supply chain sectors in Ireland. What became clear from our discussions and our questionnaire results was that outsourcing is not the golden ticket solution for quality improvement and cost reduction, “ said Saiid Ordibehesht, Managing Partner at Pathfinder.

The survey’s outsourcing findings included:

Half (50%) of those questioned reported ‘no change’ on impact of outsourcing on cost.

Just over one third (38%) reported a reduction in costs with 12% reporting an actual increase in costs resulting from outsourcing activity.

Centralisation of services, which included outsourcing, resulted in improved quality of services in around a third (31%) of cases, no change in nearly two thirds of cases (63%) a reduction in quality in 6% of cases.

The good news for European business is that the vast majority of businesses who did outsource did so in Ireland (54%) and Europe (17%). 13% of companies outsourced to India, with 3% to China and 13% to other locations.

Speaking after the publication of the survey, Saiid Ordibehesht, Pathfinder’s Managing Partner said: “The biggest challenge when it comes to taking an outsourcing decision is to decide what has core and strategic importance to the company, what risks the organisation is willing to take and to trust the outsourcer to become a manager of part of the business.

Pathfinder’s advice is to be very clear what is being outsourced and how it will be managed from the beginning:

“Organisations with a successful track record in outsourcing, have, to quote one COO ‘a well-managed black box which had clear and relatively reliable inputs and outputs.’ What these results show is that outsourcing is no quick fix solution for cost reduction,”

“Our survey results have shown that even when a service has been outsourced effectively the impact can be at best marginal, and at worst, hindering to business performance”

The Pathfinder Business Operations Survey is the first to be published in Ireland. Further interviews and a copy of the survey will be available by contacting us